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WASHINGTON Dec 31 (Reuters) - A tax credit that provides
incentives to produce wind energy, a financial lifeline for the
wind power industry, will likely be extended if Congress
approves a tentative deal between Senate Democrats and
Republicans to avert the "fiscal cliff."

President Barack Obama said on Monday that a deal with
Congress to stop a range of spending cuts and tax increases was
"within sight," although not yet finalized.

According to the sources close to the 11th-hour
negotiations, the deal would include a one-year extension for a
tax credit to support the production of wind energy, which was
set to expire at year-end without an extension by Congress.

The extension is based on a measure passed in August by the
Senate Finance Committee, which would extend the tax credit for
all wind projects that begin construction in 2013.

The American Wind Energy Association, a lobbying group, said
the Senate Finance Committee extension "accommodates the 18-24
month timeline it takes to build a wind project."

"Thousands of American workers have already been laid off
and without an extension of the PTC (production tax credit)
soon, those job losses will accelerate until 37,000 American
jobs are lost due to congressional inaction," a spokeswoman for
the lobby group said.

The fate of the credit, which has spurred the expansion of
wind farms and helped boost wind turbine manufacturing, has been
uncertain ever since it was enacted as part of the 1992 Energy
Policy Act.

The measure has been extended four times and allowed to
sunset three times, contributing to a boom-bust cycle for wind
energy production, according to the Union of Concerned
Scientists.

U.S. wind farms installed a record number of turbines in
2012 but uncertainty about the future of the tax credit has
prompted recent layoffs at manufacturers like Vestas Wind
Systems' operation in Colorado, Siemens in
Iowa and Gamesa Wind Corp's facility in Pennsylvania.

Some wind energy companies have rushed to install wind
turbines before the Dec. 31 deadline for the production tax
credit.

"The president and many bipartisan members of Congress have
been working all year to extend the wind tax credits, with
support from clean energy advocates ranging from wind companies
and the United Steelworkers to faith groups and environmental
advocates," said Courtney Abrams, federal clean energy advocate
for Environment America, an environmental advocacy group.

"But nothing has been voted on yet, and we urge Congress to
act to protect the future of wind power and a cleaner
environment," she added.

The House and Senate still need to approve any deal that
emerges on spending and taxes before Monday's midnight deadline.